Pound Advances After Solid U.K. PMI Data
January 06 2020 - 01:26AM
RTTF2
The pound climbed against its major counterparts in the European
session on Monday, as a data showed that the UK private sector
contracted less than initially estimated in December.
Final data from IHS Markit showed that the composite output
index held steady at 49.3 in December. The latest reading was the
joint-lowest since July 2016. However, the score was above the
flash 48.5.
The services Purchasing Managers' Index improved to the neutral
50.0 from 49.3 a month ago. The flash reading was 49.0. The
stabilization of service sector output was helped by a return to
improving order books.
Meanwhile, European shares extended losses amid brewing tensions
in the Middle East.
U.S. President Donald Trump threatened to strike back if Tehran
were to retaliate. Trump also threatened sanctions against Iraq
after its parliament called on U.S. forces to leave the country,
amid a growing backlash over the U.S. killing of a top Iranian
military commander.
The currency showed mixed trading against its major counterparts
in the Asian session. While it fell against the yen and the franc,
it rose against the greenback. Versus the euro, it held steady.
The pound appreciated to a 4-day high of 1.3165 against the
greenback, from a low of 1.3064 it touched at 6:00 pm ET. The next
likely resistance for the pound is seen around the 1.35 level.
After falling to near a 6-week low of 140.82 against the yen in
the previous session, the pound rebounded with the pair trading at
142.05. The pound is seen finding resistance around the 144.00
level.
The latest survey from Nikkei showed that Japan's manufacturing
sector continued to contract in December, and at a faster rate,
with a manufacturing PMI score of 48.4.
That's down from 48.9 in November and it moves further beneath
the boom-or-bust line of 50 that separates expansion from
contraction.
The pound rose as high as 1.2753 against the franc, reversing
from a 2-week low of 1.2680 set at 5:15 pm ET. Further rally may
take the pound to resistance around the 1.30 area.
Having dropped to a 6-day low of 0.8545 against the euro at 3:15
am ET, the pound changed its course, trading at 0.8500. Next key
resistance for the pound is seen around the 0.84 level.
Final survey data from IHS Markit showed that the euro area
private sector expanded at a faster-than-initially-estimated pace
in December.
The composite output index rose to 50.9 in December from 50.6 in
November. The flash reading was also 50.6.
Looking ahead, Canada industrial product price index for
November and Markit's U.S. final services PMI for December are set
for release in the New York session.
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